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• £2Pl 

Werner Erhard, creator of 
est and a man of mixed 
reputation, has developed an 
organization to help 
managers create 
breakthroughs in 
performance. Is he 
establishing just another 
fad? Or will he help create 
the magnitude of change 
that many organizations 
desperately need? Sample 
his line of thinking and see 
what you think. 


he net looi 
high. The 
as large as 

miss it. My racket swings over and 
"through" the ball to drive a serve 
that pulls my opponent wide to his 
forehand side and I strike again in 
no time to smash his return out the 
open back corner. A great feeling! 

I try to remember the action — 
reconstruct, analyze, and explain it. 
But I know that won't ensure I'll 
repeat it. 

And then there are times when 
that opposite court looks tiny, the 
net looms ten feet high, and the 
ball is a pea traveling at mach 1. 

The court, the net, and the ball 
are all real. Yet the way they occur 
for me changes dramatically from a 

says, "If you seriously examine any 


"If you seriously examine any action, you find there are always two 
sides of it: the side from which you can explain it and the side from 

which you can produce it." 

action, you find there are always two 
sides of it: the side from which you can 
explain it and the side from which you 
can produce it. After a recent two-day 
rise in the stock market, for example, I 
read an article that masterfully de- 
scribed that rise, analyzed it, and ex- 
plained it. However, even though I 
now fully understand what happened, 
I am not going to bet my life savings on 
my ability to predict the next one. 

"In individual and organizational 
performance, most of us attempt to 
produce action by working in the af- 
ter-the-fact realm of description, anal- 
ysis, explanation, and prescription. 
Rarely do we consider that producing 
an action requires a whole different 
way of looking at it. If you want to have 
a dramatic impact on performance, you 
need access to the source of action." 

A spectator can describe what I'm 
doing on the tennis court. He is living 
in the realm of evaluation and expla- 
nation — but I'm playing in the world 
of action. While there is a relationship 
between his description and what is 
occurring on the court, the two are 
clearly not the same. 

We seldom think about this sort of 
distinction, but "failing to make this 
simple distinction can lead us to being 
satisfied with an explanation about 
action and may hide from our view the 
source of action," says Mr. Erhard. 

Erhard is not in the tennis-coaching 
business. Rather, he is in the business 
of coaching executives to empower 
themselves and those with whom they 
work. Interest on the part of some 
corporate leaders in the possibility of 
individual and organizational break- 
throughs in performance has created a 
market for his services. 

Some people discount the man as a 
rip-off artist; others regard him as a 
leading-edge thinker in the field of 
human performance and effectiveness. 
More than a half million people par- 
ticipated in his est training before he 

retired it in 1984. The next year he 
introduced a new program for indi- 
viduals — "the Forum," which has 
drawn tens of thousands of partici- 

Now, working in a new organiza- 
tion devoted to management and organ- 
izations, he has captured serious 
attention among business and govern- 
ment officials. At the invitation of the 
Soviet Government and with the sup- 
port of the U. S. State Dept., he has 
been working with Soviet managers 
and educational leaders since 1981. 
Consultants are listening to what he 
has to say, and some have joined ranks 
to help him advance a new model of 
what management is all about. 

I have been exposed to some of his 
thinking through several of his affili- 
ates before and since they joined his 
newest venture, Transformational 
Technologies Inc. (TTI). Fifty estab- 
lished consulting firms have now pur- 
chased franchises in the northern Cal- 
ifornia-based network, which is dedi- 
cated to creating a new frame of refer- 
ence for management thinking. 

TTI affiliates have worked with such 
companies as GM, GE, Procter & Gam- 
ble, TRW, Lockheed, Weyerhaeuser, 
Manville Corp., Philip Morris, and the 

Royal Bank of Canada. Several have 
placed their upper-level managers in 
TTI's Center for Management Design. 
At $35,000 per manager, these corpo- 
rations are paying to be trained and 
licensed to use the TTI technology in- 
side their own organizations. The cen- 
ter alternates four two-week training 
sessions with on-site courses at the 
contracting organization for a year. 

NEW POSSIBILITIES. Forget the man. 
Forget the organization around him. 
Explore a bit of the thinking that Wer- 
ner Erhard and his colleagues are gen- 
erating. Take a walk on the leading 

This thinking and language are dif- 
ficult for the uninitiated to grasp. Even 
after many conversations over the last 
four years with his associates, atten- 
dance at a three-day workshop with an 
affiliate, and discussions with Mr. 
Erhard himself, I find it tough to con- 
vey the "message" to others. That 
makes it next to impossible to put it in 
writing, but I'll explore the possibility 
of expressing some of it in near-con- 
ventional terms without reducing its 

The best way seems to present a few 
key distinctions in the TTI vocabulary: 

"A manager gets paid for the future 
which isn't going to happen other- 
wise." Although pay may be based on 
past performance, what the company is 
really counting on is the manager's 
intervening in some way to change the 
future course of events. "Managers 
need powerful access to the future, and 
not the predictable future," says Mr. 
Erhard. "While most managers spend 
their time attempting to predict the 
future accurately — and while that's 
valuable — the best managers are able 
to generate a future which was not 
going to happen otherwise — that is, a 
future which was not predictable." 

Managers tend to think of them- 
selves as making choices among op- 
tions available to them. Mr. Erhard 
makes a distinction between options 


"While most managers spend their time attempting to predict the 

future accurately — and while that's valuable — the best managers are 

able to generate a future which was not going to happen 

otherwise. ..." 

and possibilities. An option, he says, is 
an alternative that you develop out of 
your past — out of experience. A possi- 
bility, on the other hand, comes from 
your commitment to the future. It 
comes at you. It does, however, have to 
be consistent with the past. In retro- 
spect, it makes sense. Otherwise, it's 
just a pipe dream. 

BUILDING A FUTURE. In training ex- 
ecutives to generate the future, the TTI 
approach is to invite them to consider 
first that the future for which they get 
paid actually exists somewhere before 
it happens. It exists in conversation, 
Mr. Erhard suggests. The organiza- 
tion's future "exists in the conversation 
of its management — like a spoken vi- 
sion, for example." 

Outstanding managers can begin 
building the future through 
"conversation for possibility." This is 
where they really get leverage on peo- 
ple's actions. They begin to generate 
new futures. "Once a future has been 
created in a conversation for possi- 
bility, the resources of the organiza- 
tion and the reality with which it must 
deal begin to show up differently for 
people. They begin to see new ways to 
employ the resources and begin to see 
new openings in the reality," Mr. 
Erhard observes. 

"An organization is a network of 
conversations." Management is wres- 
tling with ways to define and improve 
"corporate culture." But what does the 
term refer to? Even the best answers 
have been a bit vague, and they have 
offered little help in coming to grips 
with culture. In Mr. Erhard's view, a 
better way to view culture is in terms of 
a network of conversations. By that he 
means the conversations in any orga- 
nization about what is and is not being 
done, what should and shouldn't be 
done, what can and can't be done, what 
certain individuals are and what they 
are not, and what they should and 
shouldn't be. These conversations go 
on not only between individuals but 

also in individuals' minds. 

The mood or tone of these con- 
versations and the underlying assess- 
ments and commitments add up to a 
picture of "reality," or what Mr. Erhard 
prefers to call "the clearing." This 
clearing determines how the world 
and their role in it shows up for people. 

Thinking of the organization as a 
network of conversations gives the 
people in the organization a better 
handle for dealing with culture. "No 
one is left trying to manipulate moods. 
No one is left with the near-impossible 
task of imbuing people with new qual- 
ities. This takes the mystery out of 
'corporate culture.' You have a ready 
way of accessing it. You can change the 
'corporate culture' by accessing the 
conversation," says Mr. Erhard. 

ALTERING REALITY. But how do we 
change a conversation or a network of 
conversations? A series of other 
Erhard distinctions suggests an ap- 

"People's actions are always per- 
fectly correlated to the way the world 
occurs for them." Even the manager 
who explains to people what needs to 
be done, describes what actions to take, 
and educates or trains them finds that, 
while performance improves, there's 

no real breakthrough in their per- 
formance. That's because, according to 
the TTI view, a breakthrough comes 
only when working in that realm 
called "the source of action." 

Mr. Erhard explains: "You can alter 
people's performance, if you've got 
enough time, with information and 
knowledge. You can do it, if you've got 
enough time, with experience or beat- 
ing them over the head. But if you 
want a breakthrough in people's ac- 
tions, you have got to alter the way the 
world occurs for them." 

"See people as a conversation." For 
the most part, we manage people as if 
they were a collection of abilities, 
skills, and personality traits. Accord- 
ing to the TTI technology, seeing peo- 
ple in this way leaves them and you 
with no powerful access to per- 
formance. To get at the source of ac- 
tion, TTI practitioners ask executives to 
regard people as conversations. 

Since the way the world occurs for 
people is shaped by the conversations 
they are, seeing them as conversations 
gives us access to altering the way the 
world occurs for them. You may be a 
conversation for being uncoordinated 
or being graceful, for being un- 
trainable or being open to new 
thoughts. Once you consider that you 
are a conversation, you have access to 
yourself. You can begin to change your 
reality, yourself, and your future by 
changing the conversation. 

Mr. Erhard describes a demonstra- 
tion with an executive participating in 
one of his workshops. "I asked for a 
person who was a bit uncoordinated to 
play a game of catch with me. The 
woman who volunteered was demon- 
strating that she was uncoordinated 
because, no matter how slowly I threw 
the ball to her, she usually missed it." 
Then he said, "Forget about catching 
the ball. We're going to play a new 
game and the object of it is for you to 
tell me which way the ball is spinning 
when it comes toward you." 

JUNE 15, 1987 /INDUSTRY WEEK 54 


"We're giving management something that empowers the skills they 
already have — not for incremental improvement but for 


She studied each toss carefully, call- 
ing out the direction of spin. In time, 
the others in the room became aware of 
what was happening. She was catching 
the ball every time even though it was 
being thrown faster and faster. 

In the first round, suggests Mr. 
Erhard, she was a conversation for 
being uncoordinated and unathletic. 
Inside that conversation the ball oc- 
curred for her as tiny and moving at 
supersonic speeds. "Her actions were 
perfectly organized to deal with a ball 
that couldn't be caught because of its 
size and speed." 

In the second round she was a con- 
versation for being intelligent, per- 
ceptive, and articulate. Inside that con- 
versation the ball occurred big enough 
and slow enough to handle; her actions 
were correlated to that, and she caught 
the ball every time. 

ACTION'S CORE. Breakthrough re- 
sults can be produced by working at 
the source of action. "However," Mr. 
Erhard cautions, "a manager has to be 
able to shift from one realm to another. 
If he's talking to the stockholders, he 
has to deal in the realm of explanation 
and understanding. But if he's work- 
ing with employees to create break- 
throughs in performance, he needs to 
operate in the realm of the source of 

"There are times when speaking is 
action." In the TTI vocabulary there 
are several kinds of conversation. One 
is "conversation for action." It differs 
from much of our conversation which 
reports, describes, explains, or repre- 
sents. "When you say 'chair,' a chair 
does not come out of your mouth. The 
word represents something. But when 
you say 'I promise,' what comes out of 
your mouth is a promise. To promise is 
to act. And a promise becomes the 
opening for action," says Mr. Erhard. 

A request, likewise, is an action. 
Most executives talk about what ought 
to be done. But they fail to commit 
themselves by making a direct re- 

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quest — which would give the people 
with whom they work a clear oppor- 
tunity to decline, make a counteroffer, 
or commit themselves by making a 
promise to produce what is requested. 

"The unit of management work is 
conversation." When you are actually 
managing, you are in a conversation. 
The conversation may be a con- 
versation with yourself, with those to 
whom you are accountable, or with 
those who report to you. You may be 
speaking or writing. 

Most managers would say that their 
work is making decisions. But what is a 
decision? "A decision is a person say- 
ing something (to himself or to some- 
one else). A decision is a person speak- 
ing as action in the form called 

"In a meeting," says Mr. Erhard, 
"what you hear all too often is a lack of 
action. You hear situations and events 
being represented. You hear people 
describing and explaining, but you 
hear no action. You can impact that 
meeting by acting. You can move that 
meeting by making a request. You can 
move that meeting by making a prom- 
ise. You can move that meeting by 
making a declaration. 

"Speaking as action in the form of a 

declaration actually establishes some- 
thing. It establishes a future as a possi- 
bility to which you are committed." 

NEW OPENNESS. TTI and its affili- 
ates don't claim to have the ultimate 
answer to creating breakthroughs. 
They don't offer an alternative to what 
good managers are already doing be- 
cause "the people we've had a chance 
to work with are good people. They are 
already producing results. We're 
giving management something that 
empowers the skills they already 
have — not for incremental im- 
provement but for breakthroughs." 

I have talked with several of these 
managers; they report improvements 
in output and quality that go well be- 
yond any targets they would normally 
have set even in their highest hopes. A 
common denominator that I detect is a 
new openness to possibility that leads 
directly to seeing possibility in others 
and helping them go for it. This takes 
the activity far out of the self-help 
arena where Mr. Erhard's fame began. 

New techniques and new tech- 
nologies are offering far more poten- 
tial than can be utilized by managers 
who simply extend the past rather than 
strive for breakthroughs. Unfortu- 
nately, says Mr. Erhard, most people in 
organizations are committed primarily 
to looking good "because the structure 
we give them makes it a better deal to 
be careful with your commitments and 
not produce an achievement than to be 
bold in your commitments and, maybe, 
fall a bit short of your vision — but still 
produce a breakthrough." 

I am aware that Mr. Erhard and his 
associates may be creating just another 
system of thinking that comes and 
goes. On the other hand, I'll watch 
closely to see if they can lead a signifi- 
cant number of managers to the indi- 
vidual and organizational break- 
throughs needed to keep up with the 
times. To use an expression they fre- 
quently employ — "consider the possi- 
bility." ■